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On 15th November VISA announced its digital wallet brand and acceptance mark, V.me, which is slated to launch in the US in 2012 and will rival other digital wallets such as PayPal and American Express’ Serve.

V.me will enable financial institution partners (e.g. banks) to offer customers a digital wallet to store their VISA and non-VISA payment account details, which can then be used to make online payments via multiple devices, including PC, tablet and mobile phone. V.me aims to simplify the online shopping experience for consumers by providing click to buy functionality, and to add security by circumventing the need for users to enter and transmit payment information over the internet.

So, other than trying to expand the number of transactions flowing over its payment network why is VISA getting involved?

Low digital wallet use: Current adoption of digital wallets is relatively low given there will be over 1.5B broadband users by the end of 2011. Internet users remain reluctant to store their payment card details to digital wallets due to security fears.

PayPal has 103 m active users globally, with most growth in transactions coming via Ebay, the auction site of its parent company. Merchant acceptance of PayPal remains limited.

Amazon claims “millions” of users have registered their payment card details to its 1-Click digital wallet.

Brand: In 2011 VISA ranked 20 in the top 100 most valuable brands globally and also as the strongest financial service brand. VISA’s trusted brand may help consumers overcome their security fears where others have failed.

Increasing need for cross platform payments: As internet use expands across multiple device categories, including PCs, mobile phones and tablets, consumers will want to be able to easily pay for goods and services across the range of devices. Access to a digital wallet can in theory provide this simplicity.

The number of broadband users is set to rise by two thirds to just over 2.57 B by the end of 2016.

The number of mobile internet users will expand by over 90%, to reach 1.75 B by 2016.

When V.me launches in 2012 it needs to be supported by popular online retailers. As a user why sign up, unless this payment method can be widely supported? Big online retail sites such as Amazon, Ebay and iTunes, with their own digital payment solutions will likely resist, but there are many other e-commerce sites that would benefit.

Banks will also play a critical role in the adoption of the co-branded V.me digital wallets. In my opinion consumers will be more likely to trust the security of a payment service offered by their bank over that of a third party. For this reason alone I expect providers of digital wallet services, including mobile operators (e.g. mPass), to face strong competition from established payment industry players, such as the banks.